MAF 2016 to 2017 financial management methodology
Table of contents
Methodology overview
The annual MAF assessment in the area of Financial Management aims to improve oversight and management practices in departments as well as to support the Government of Canada’s strategic direction for financial management.
This Area of Management measures the departmental financial management performance in key foundational areas. Given the maturity of the financial management policy suite, this Area of Management also serves as a means to assess compliance with Treasury Board policy instruments on a targeted basis.
The Financial Management key foundational areas for MAF 2016-17 include:
- External Financial Reporting
- Resource Management
- Internal Control Management
- Transfer Payments
- Stewardship of Financial Management Systems
- Financial Community Capacity
These areas will be assessed using two aspects: management practices and management performance.
Questionnaire
External financial reporting
Outcome statement: Accurate financial information demonstrates that financial resources are well managed and accounted for transparently.
Rationale pertaining to questions below: Canadians and parliamentarians expect that financial resources are well managed and accounted for transparently. The MAF assessment will provide deputy heads with useful information that will help them ensure effective measures are in place to support these responsibilities related to financial reporting.
Indicators and Calculation Method (where applicable) | Expected Result | Policy Reference | Evidence Source and Document Limit | Category |
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Organizations should strive to have zero in-year and year-end post-closing entries, unadjusted audit misstatements, or year-end errors found after tabling of Public Accounts of Canada. |
Financial Administration Act, 65 |
TBS-OCG will respond using existing data within the central agency (RG and OAG reports). |
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Department and agency financial statements should conform to the reporting requirements communicated by the OCG. |
N/A |
TBS-OCG will respond using existing data within the central agency. |
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Resource management
Outcome statement: Management of public funds is supported by effective planning, budgeting, monitoring and reporting.
Rationale pertaining to questions below: Management of public funds is supported by effective planning, budgeting, monitoring and reporting which are based on reliable information and the sound analysis of that information.
Indicators and Calculation Method (where applicable) | Expected Result | Policy Reference | Evidence Source and Document Limit | Category |
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Program or Operating Vote Adjusted Lapse: A management discussion should be considered for Program or Operating vote adjusted lapses less than 2% or greater than 5% of Program or Operating vote authorities. Capital Vote Adjusted Lapse: Organizations should lapse less than 10% of their Capital vote authorities. Note that organizations can carry forward up to 20% of their Capital vote authorities if a carry forward rationale exists. Grants and Contributions Vote Adjusted Lapse: A management discussion should be considered for Grant and Contribution vote lapses that are greater than 5% of Grants and Contributions vote authorities. Total Adjusted Lapse: A management discussion should be considered for total adjusted lapses less than 2% or greater than 5% of total voted authorities. |
N/A |
TBS-OCG will respond using existing data within the central agencies (Expenditure Management System (EMS) and Central Financial Management Reporting System (CFMRS)). |
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Department and agency managers at the lowest level of an organization’s delegated financial authorities should have access to their budget within 30 days of the start of the fiscal year. |
N/A |
Department or agency to provide number of calendar days. No evidence required. |
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Departments and agencies should identify and assess financial risks over a multi-year period (rolling three-year) as part of their approach to financial planning and budgeting. |
N/A |
Department or agency to respond. No evidence required. |
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Internal control management
Outcome statement: Stewardship of public resources is adequately managed through risk-based internal controls.
Rationale pertaining to questions below: Internal controls refer to a set of means that organizations put in place to mitigate risks and provide reasonable assurance in the following broad categories:
- The effectiveness and efficiency of programs, operations and resource management, including safeguarding of assets;
- The reliability of financial reporting; and
- Compliance with legislation, regulations, policies and delegated authorities.
As per the Policy on Internal Control, an annual risk based assessment of the system of internal controls over financial reporting is required to determine its ongoing effectiveness.
Late payments and related payment of interest is a frequent issue arising from suppliers, in particular small suppliers. This issue is one of compliance with the Directive on Payment Requisitioning and Cheque Control.
The aging of accounts receivable indicates the length of time that money has been owed to the Crown. As per the Directive on Receivables Management, departments are expected to record and pursue the collection of receivables.
The recording of commitments is a key control to ensure there is a sufficient unencumbered balance before providing authorization for a planned expenditure. As per the Directive on Payment Requisitioning and Cheque Control, departments are expected to record a commitment for all planned expenditures, including staffing actions.
Policy on internal control
Indicators and Calculation Method (where applicable) | Expected Result | Policy Reference | Evidence Source and Document Limit | Category |
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Departments and agencies should continuously monitor the effectiveness of their internal controls over financial reporting and conduct an annual risk-based assessment of the system of internal control over financial reporting to determine its ongoing effectiveness. |
Policy on Internal Control, 6.1.2 |
TBS will respond using the “Annex to the Statement of Management Responsibility Including Internal Controls over Financial Reporting” (published on Department or Agency website). |
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Payment on due date
Indicators and Calculation Method (where applicable) | Expected Result | Policy Reference | Evidence Source and Document Limit | Category |
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Organizations should pay all suppliers on time. |
Directive on Payment Requisitioning and Cheque Control, 6.3.1 |
Department or agency to respond. No evidence required. |
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Departments and agencies should automatically pay interest on payments made later than the due date. |
Directive on Payment Requisitioning and Cheque Control, 6.3.3 |
Department or agency to respond. No evidence required. |
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Management of accounts receivable
Indicators and Calculation Method (where applicable) | Expected Result | Policy Reference | Evidence Source and Document Limit | Category |
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Departments and agencies should pursue the collection of accounts receivable and, when deemed uncollectible, taking timely action regarding the write-off, remission, forgiveness, or waiver of the debts. |
Directive on Receivables Management, 6.1.6 and 6.1.9 |
TBS will respond using existing data within the central agencies (Public Accounts Preparation System (PAPS)). |
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Recording of salary commitments
Indicators and Calculation Method (where applicable) | Expected Result | Policy Reference | Evidence Source and Document Limit | Category |
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Table 6 Notes
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Organizations should ensure salary commitments are recorded at the time of expenditure initiation and that delegated managers have ongoing access to salary reports identifying the portion of their salary budget that remains unencumbered. |
N/A |
Department or agency to respond. The salary report(s) to which delegated managers have ongoing access must be submitted as evidence (1 document). |
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Transfer payments
Section only applies to departments and agencies with Transfer Payment Programs.
Note: Questions related more broadly to service standards for department or agency priority services are listed in the 2016-17 Service Management Methodology.
Outcome statement: Transfer payments are managed in a manner that is citizen and recipient focussed
Rationale pertaining to the questions below: This element aligns with the expected result of quicker funding decisions outlined in the Government Action Plan to Reform the Administration of Grant and Contribution Programs. Evidence gathered to date suggests that departments have room to improve in this area. Progress on this element has a direct impact on applicants and recipients. In practical terms, it is an element that is relatively easy to measure.
Indicators and Calculation Method (where applicable) | Expected Result | Policy Reference | Evidence Source and Document Limit | Category |
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Departments and agencies should meet service standards for their transfer payment programs. |
N/A |
Department or agency to respond. No evidence required. |
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Departments and agencies should ensure service standard performance results are publicly available. |
N/A |
Department or agency to respond. The link to the website must be submitted as evidence. (1 document) |
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Stewardship of financial management systems
Outcome statement: Prudent investments are made in Financial Management Systems which are aligned with the OCG Financial Management Transformation Vision: “to implement a streamlined, consolidated & integrated Enterprise Model for financial management in the Government of Canada”.
Rationale pertaining to questions below: All departments or agencies must comply with the Policy & Directive on the Stewardship of Financial Management Systems to ensure prudent investments are made in the departmental Financial Management System in accordance with TBS/OCG direction. All departments or agencies must align to enterprise direction for Financial Management Transformation.
Indicators and Calculation Method (where applicable) | Expected Result | Policy Reference | Evidence Source and Document Limit | Category |
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Departments and agencies should consult with the cluster, other departments and agencies, and the OCG before investing resources in the department or agency Financial Management System. |
Directive on the Stewardship of Financial Management Systems, 6.1.4 |
Department or agency to respond. No evidence required. |
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Financial community capacity
Outcome statement: Strengthen public sector financial management and its leadership within the financial community and within departments thereby contributing to appropriate stewardship of public resources, effective decision making, and efficient policy and program delivery.
Rationale pertaining to questions below: Financial Community Capacity is essential to supporting a sound financial departmental function.
Indicators and Calculation Method (where applicable) | Expected Result | Policy Reference | Evidence Source and Document Limit | Category |
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Organizations should ensure the Comptroller General is advised of the appointment, transfer, or departure of the CFO. |
Policy on Financial Management Governance, 5.1.8 |
Department or agency to respond. No evidence required. |
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Departments and agencies should have succession plans in place for critical financial management positions. |
N/A |
Department or agency to respond. No evidence required. |
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Glossary
- Financial Management System (FMS)
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FMS is any combination of business processes (end-to-end, automated and manual), procedures, controls, data and software applications, all of which are categorized as either a departmental financial and materiel management system (DFMS) or program system or central system that produces financial information and related non-financial information.
Financial management systems are used for any of the following:
- Collecting, processing, maintaining, transmitting and reporting data about financial events and to maintain accountability for the related assets, liabilities and equity;
- Supporting financial management, planning, budgeting and decision-making activities;
- Accumulating and reporting cost information; or
- Supporting the preparation of internal and external reports, such as departmental financial statements and input to the Public Accounts of Canada.
- Financial Management Transformation (FMT)
- FMT is a business-led effort across the Government of Canada to fundamentally change the way the financial management function supports enterprise management and decision-making to support effective program delivery and service to Canadians.
- Office of the Comptroller General (OCG)
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The Comptroller General of Canada is responsible for providing functional direction and assurance government-wide for financial management, internal audit, investment planning, procurement, project management, and the management of real property and materiel.
The Office of the Comptroller General supports the Comptroller General of Canada by working to ensure that sound policies, standards and practices are in place; by overseeing performance and compliance across the federal government; and by maintaining and building vibrant professional communities through a range of recruitment and development activities.
For additional definitions of the terms and expressions used in this questionnaire, please refer to Appendix B of the MRRS Instructions and Annex A of the Policy on Evaluation.
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